After experiencing two years of recession in 2001 and 2002 due to the global economic slowdown, IT crisis and inner security problems, the Israeli economy has recovered since 2003. The GDP growth rate was 1.3% in 2003, 4.3% in 2004 and 4.2% in 2005. The IMF forecasts a growth of 3.9% in 2006. High technologies sector is growth's main driving force and foreign investments pick up again. Unemployment remains high, it touched 10.4% of the active population in 2004. Despite the difficult overall political situation, Israel has an open, diversified and modern economy.
The agriculture sector employs 2% of the population. The country's main crops are fruits and vegetables, that are largely exported, cereals, wine and breeding. The dry climate and necessity to irrigate is a permanent source of conflict with Palestinians and the neighbouring countries. High tech industries represent 40% of industrial exports and 120 israeli companies are Nasdaq quoted (what makes Israel rank third in the world on this index, behind the United States and Canada). Israel's other important activity sectors are diamonds cutting and trading, textile and tourism. Tourism is still sustained, despite the Israeli-Palestinian conflict. The pharmaceutical sector has been registering good results since Israel specialized in generic medicines.
The Israeli economy is very open: the country signed a free trade agreement with both the United Sates and European Union. Israeli External trade represents half of its GDP. The country largely imports finished products and raw materials. Its three first trade partner countries are the United States, Belgium and Germany. The European Union is Israel's largest trade partner with 31% of its exports and 40% of its imports. The country mainly imports precious stones, high tech products, capital and transport goods as well as hydrocarbons.
Israel mainly exports precious stone (diamonds, cultured pearls...represent 37,3% of its exports), and hight tech products.
